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Gold Fields (GFI) Downgraded To 'Sector Underperformer' By CIBC, PT Lowered

 February 19, 2013 12:47 PM

(By Balachander) Gold Fields Ltd. (NYSE: GFI) shares were downgraded to "sector underperformer" from "sector performer" by CIBC World Markets Inc.

The brokerage also lowered price target on the stock to 82.00 rands from 110.00 rands.

Gold Fields now enters a new era with a revised strategy focusing on cash flow generation, high dividend payouts, and cautious growth, CIBC wrote.

"We maintain our previously articulated view that we do not expect the company to attract a higher rating yet," the brokerage said.

"Although this strategy could eventually deliver higher margins and higher dividends, it implies more near-term production cuts (as high-cost operations are stopped) and slower growth than previously forecast," CIBC said. "This is after having pulled back our numbers sharply a couple of months ago."

[Related -One Thing Needs To Happen Before Precious Metals Start To Rally Again]

Given the company's poor delivery track record (not all the under-delivery can be blamed on the South African portfolio of assets), CIBC believes the market will wait for delivery before it buys the new promises.

ADRs of GFI, which has been trading in the 52-week range of $10.75 to $16.34, traded 3.49 percent lower at $10.77 on Tuesday.

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